Two Long Island men were sentenced Thursday for their roles in a $147 million stock-fraud scheme that cheated investors — many of them elderly — around the country, according to officials.
Ronald Hardy, 42, of Port Jefferson, was sentenced to 10 years in prison by U.S. District Judge Joanna Seybert at the federal court in Central Islip; while Dennis Verderosa, 67, of Coram, who had a lesser role in the scheme, was sentenced to 6 years, officials said.
Hardy and Verderosa were among more than a dozen people, most of them from Long Island, who were indicted in the scheme in July 2017 involving a series of interlocking companies. Others charged in the scheme operated from Los Angeles, San Diego, and St. Petersburg, Florida, officials said.
Those charged ran a so-called “pump-and-dump” scheme in which the participants operated “boiler rooms” from which participants called vulnerable investors to pressure them into buying a number of penny stocks that were sharply overvalued.
The stocks in a “pump-and-dump” are secretly controlled by those involved in the scheme who markedly inflate the stocks' price — the pump — and then sell them to investors — the dump — after which the values of the stocks drastically collapse.
Hardy was a manager at a Melville boiler room known by a number of names, including Power Traders Press and My Street Research. The judge ordered him to forfeit the contents of a bank account and two properties he owned in Sarasota, Florida, officials said. Hardy pleaded guilty in August 2018 to conspiracies to commit both securities and wire fraud, as well as securities fraud and money laundering, officials said
Verderosa, who was a cold-caller and an account executive at the boiler room, was ordered to forfeit $341,000, officials said. He pleaded guilty in April 2018 to conspiracy to commit wire fraud, officials said.
Hardy and Verderosa also will have to pay restitution to victims in an amount to be determined at a later date by Seybert.
“Hardy and Verderosa have been punished for luring vulnerable victims, many of them in their 70, 80s, and 90s, in a web of lies in order to steal their life savings," Eastern District United States Attorney Richard Donoghue said in a statement. “This office will continue to work tirelessly with our law enforcement partners to protect investors from calculating con-men.”
In one pitch used to lure investors, officials have said, a boiler room salesman involved in the scheme falsely told potential investors that a media/internet penny stock he was selling was about to be also purchased by the Walt Disney company. In another pitch, a salesman said a penny stock for sale was comparable to the initial offering of Twitter, and was ready to escalate in value.
The participants could also be contemptuous of their victims, officials have said. When one stock purchaser called to complain about his losses in stock value, one salesman allegedly told the victim: “I am tired of hearing from you…Do you have any rope at home? If so tie a knot and hang yourself or get a gun and blow your head off.”
The publicly traded stocks involved in the scheme, officials said were: National Waste Management Holdings, CES Synergies, Grilled Cheese Truck, Hydrocarb Energy Corporation and Intelligent Content Enterprises.
In addition to selling inflated stock to victims, some were also charged “subscription fees” to receive recommendations on which stocks to buy. officials have said.
Two of the other defendants have previously been sentenced, officials said.
Emin L. Cohen, 33, of Coram, was sentenced to 2 years in prison, and McArthur Jean, 34, of Dix Hills, who is also known as John McArthur, was sentenced to 4 years, officials said.
A number of other co-defendants have pleaded guilty and are awaiting sentencing, while four are scheduled for trial, officials said.